Why Sell Web Hosting?

Channel partners cannot live on Web hosting alone. But offering Web hosting increasingly is considered by business customers to be table stakes within a service bundle. And providing Web site hosting, e-mail and the like can provide a seller of communications services with an entrée into higher-value managed services.

There are a lot of people that see hosting as a checkbox feature youve got to have it, says Nate Gilmore, director of marketing for Concentric, the hosting business unit of XO Communications Inc. Others see it as an enablement.

As a result, most service providers bundle hosting along with other services, he says. Its more like another arrow in the quiver, continues Gilmore. Its both offensive and defensive.

Concentric offers private-label and agent opportunities to enable resellers to offer Web hosting and related services targeting SMBs. If an agent just wants to bundle hosting but doesnt want to handle customer support and billing, Concentric/XO allows them to do so with residuals as high as 30 to 35 percent, says Gilmore. But if channel partners want to bundle the Concentric/XO services and handle customer support and billing themselves, its more of a volume discount offer on the wholesale services, he says, adding that his company will help channel partners with positioning and provide an account manager in both cases.

The Concentric/XO hosting solution includes four basic pieces:

  • Hosting (based on Windows or Unix operating systems, and including clustered hosting)
  • E-mail and collaborative e-mail (which includes such features as shared calendar, shared contact, etc.)
  • Domains and DNS-related features and functionality (including denial-of-service prevention, as one example),
  • Customer support and professional services (including standard customer, professional Web site design services, database troubleshooting and more)

Paul D. Engels is executive vice president and CMO with Inc., which offers wholesale Web hosting services aimed at the SMB customer. He says his company has not seen much, if any, interest by channel partners in hosting services. Thats because the individual SMB spend typically is no more than a paltry $20 to $30 month not enough money for resellers to get interested, he says.

As a result, he continues, an agent would find it virtually impossible to make a margin on hosting. However, if that agent puts together a suite of value-added services like hosting, e-mail and maybe collaborative e-mail, and possibly the ability for SMBs to synch their wireline communications with their mobile devices, thats when things start to become compelling, he says, adding that it could result in annuity fees within the $100 to $300 range.

Engels adds that while the argument for agents to get into Web hosting may be up for debate, doing referrals for Web hosting is a good match for VARs that specialize in Web site development.

John Engates, CTO of Rackspace US Inc., a dedicated hosting solutions provider, says there is a movement from simply providing servers to getting into services. Instead of giving you a server with a mail server on it, we can give you mailboxes. The Microsoft platform turns Microsoft Exchange into a multitenant offering. Its not out-of-the-box from Microsoft, but companies like ours can build control panels onto it and add BlackBerry and other support for it.

It is these kinds of advanced services that make Web hosting an interesting business in the long run, says Lane Patterson, director of the channel for Web hosting company Verio Inc. Once a service provider wins an SMB account with broadband access, they can also bring basic Web hosting to the table, and then try to up-sell that account by supplying blogging software, which can generate about another $1 a month; Web shopping carts, which can add another $2 to $40 a month; and photo gallery support, which brings another $2 to $10 to the till. Meanwhile, antivirus software as a managed service can bring a service provider $2 a month per customer. And, down the line, CRM and vertical business applications can be added to the mix, he says. Were looking very closely at CRM options and financial apps maybe its QuickBooks or something along those lines hosted versions of that, says Patterson.

Your Space

Rackspaces Partner Network offers the following options to meet a range of channel partner needs.

Select Partner

This option is ideal for individuals and organizations with occasional customer hosting needs. As a select partner, youll have a relationship with a dedicated sales executive and channel manager. Youll also have access to Rackspace sales and marketing materials, making it easy to present Rackspace to your customers. Select partners can also choose a revenue share option based on your business needs.
Premier Partner
This option is ideal for individuals and organizations with frequent customer hosting needs. Premier partners reap the benefits of collaboration, with access to the Rackspace sales management tool, as well as co-branded sales and marketing materials. You will work in partnership with your sales executive and channel manager to develop programs and a team-selling approach. Premier partners receive quarterly sales calls from Rackspace and can participate in a market development fund program.
Business Partner
This option is ideal for national or regional partners seeking high-level sales, marketing and technical support. Business partners leverage a synergistic relationship between products and customers. Monthly strategy sessions allow you and Rackspace the opportunity to develop shared goals, plans and on-site training and consultation.

Only Online
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Concentric Inc.
Rackspace US Inc.
Verio Inc.
XO Communications Inc.

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